Housing policy debates often fixate on density—how many units a parcel can hold, how tall a building can rise. But for developers underwriting projects in Honolulu, the more consequential factor is whether a project can be approved as of right, without discretionary review. That distinction is central to Bill 18, introduced by Council Vice Chair Andria Tupola, which would extend the Chapter 32 Affordable Rental Housing program into additional zoning districts, including apartment, business, and Waikiki's apartment precinct.
The program, originally established by Bill 7 in 2019, offers relaxed zoning standards, property tax relief, and fee waivers in exchange for at least 80% of units being rented for a minimum of 15 years at rates affordable to households at or below 100% of area median income. For 2026, that threshold is $93,400 for a single person and $133,400 for a family of four. Successive drafts have also addressed lot area limits, replaced a blanket 60-foot height cap with underlying zoning limits, allowed additional units near high-service bus stops, and repealed maximum square footage rules.
Yet the provision that matters most, according to Mike Perkins of The Bratton Team at Colliers International Hawaii, is that Chapter 32 projects proceed directly to building permit. "It provides a lot of uncertainty to the process," Perkins says of the current 201H spot-zoning approach, which requires political navigation through neighborhood boards and public hearings with unpredictable outcomes. That uncertainty is priced conservatively, as developers carry land through an indeterminate approval period. By contrast, a by-right pathway lets developers know at the outset what is permitted, compressing timelines, reducing carry costs, and lowering the cost of capital. "That in and of itself would help speed up the process," Perkins notes.
The stakes are significant: Honolulu requires 27,710 new units between 2023 and 2027, according to the 2024 Hawaii housing planning study. A predictable approval process could widen the pool of capital willing to invest, as the risk being underwritten shifts from political to construction and lease-up risk. Other regulatory changes are also shaping the market, including Maui's Bill 9 phasing out short-term rentals in apartment-zoned condos and Bill 88 creating the H-3 and H-4 rezoning pathways, plus a state law requiring counties to permit two accessory dwelling units per lot by year-end.
Perkins argues that regulatory clarity now weighs more heavily in underwriting Hawaii income property than interest rates, and that entitled land carries a similar question—buyers may need to reaffirm older entitlements, introducing time costs. Bill 18's move to convert a discretionary process into a defined one would remove a discount that currently applies across the market. For developers and investors, the regulatory pathway attached to a site belongs alongside its physical characteristics in any valuation. Two parcels with identical zoning are not equivalent if one qualifies for by-right approval and the other requires discretionary review—the difference shows up in carry cost, financing terms, and buyer pool breadth. As Hawaii's approval framework becomes more defined, sites positioned to use it stand to benefit first. Current Hawaii inventory and monthly market statistics describe what is available and how it is pricing, but knowing which approval pathway attaches to a given position is what turns that into an investment decision.
